GRP Rainer Rechtsanwälte – Report on extraordinary termination of a commercial agency agreement
30 Apr 2019
Either party to a commercial agency agreement can give the other extraordinary notice of termination for good cause. One important example of good cause is where there is a breakdown in the relationship of trust.
As in the case of other agreements, either party to a commercial agency agreement can give the other extraordinary notice of termination with immediate effect for good cause. Our experience at the commercial law firm GRP Rainer Rechtsanwälte has revealed that a common point of contention with respect to extraordinary termination is whether there is in fact good cause justifying termination of the contractual relationship.
Following the legislature’s failure to provide a clear definition of “good cause” justifying extraordinary notice of termination, the Oberlandesgericht (OLG) München, Munich’s Higher Regional Court, delivered a ruling on February 8, 2018 that has brought greater clarity to this issue. The Court held that if the relationship of trust between the parties to the agreement has broken down irretrievably, the commercial agency agreement can be extraordinarily terminated because any further collaboration can then no longer be reasonably expected in light of all the circumstances. In every instance, the outcome is contingent on a detailed assessment of each individual case (Az.: 23 U 1932/17).
In the instant case, the two parties had concluded a commercial agency agreement. This set out in writing their common understanding that the plaintiff’s husband would carry out the role of commercial agent on her behalf. In doing so, he saved extensive data records on his personal computer without authorization. The company viewed this as a breach of trust and issued notice of extraordinary dismissal. The plaintiff, having refused to readily accept this, demanded payment of bonuses, commission as well as an indemnity payment due to commercial agents.
The OLG München concluded that the notice of extraordinary dismissal was effective. It ruled that downloading and saving the data records onto a personal computer had not been necessary for the purposes of carrying out the role of commercial agent, and that the plaintiff needed to take responsibility and be held accountable for her husband’s conduct. The Court went on to state that downloading and saving the files without authorization had resulted in the irretrievable breakdown of the relationship of trust between the parties. According to the OLG München, this meant that it was no longer reasonable to expect the parties to continue working together until the end of the ordinary notice period. Moreover, the misconduct was said to have been so severe that no prior written warning was necessary.
Lawyers with experience in the field of commercial law can offer advice should legal disputes arise.